Hello BP Members!
I am a brand new investor and I need a little help. I am in my 20's and I would love to flip. Here's my story:
I purchased a small home (short sale) in 2013 for $55,000 in San Bernardino. Right now there is about $75,000 of equity (the tenant has paid down about 1/2 of the mortgage and the value of homes in the area went up). I graduated from law school and was able to purchase the home because I was working. However, I decided to open my own law practice last year and as you know businesses starting out do not make much of a profit the first couple of years. So I cannot qualify to purchase another home. Buying with cash is my only option.
What do you think would be the best option for purchasing with cash to flip? I was thinking if I get a HELOC for $75,000 and I am able to find similar small properties (short sale, foreclosure...etc), I can put a cash offer on a property, fix it up and sell it. Then I can pay back the HELOC within maybe 90 days and possibly make 10-15k. I would then use the HELOC again + my profit (1031 exchange for tax purposes) and continue the cycle until I am able to have enough cash without using the HELOC for investment purposes.
My questions are:
1) Does this seem like a feasible plan that can work? If not is there a better way to do this?
2) Do you think if I am going to begin flipping and using cash that I should form an LLC?
Thank you so much!!
